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Takeaways from G2E Las Vegas trip

All the manufacturers had impressive content, but I’m not sure anything we saw at the show will change ship shares IN THE NEAR TERM, grow the market, nor will good content change the fact that.

  • There aren’t many new facilities opening up in FY2010
  • None of the new domestic markets will really come to fruition in FY2010
  • Manufacturers are hopeful but have yet to see a real pick up in the replacement market

In the longer term we think that manufacturers are cognizant of the need to reach younger players and are attempting to reach that player through features like:

  • Skilled or the appearance of skilled gaming
  • More community elements to bring some of the excitement of table games to slots
  • Personalization
  • Greater use of sound and color

One of the trickiest things is figuring out whether the better content we saw this year will actually grow the market or just cause existing players to migrate away from older games they were playing.  I don’t have the answer but I think, in the short term, it’s very hard to grow the market in the current economy.

Most manufactures showed a large number of games which utilized past hit titles and added additional features to enhance level of excitement surrounding the game (bonusing, wheels, community features, tournaments etc).

More focus on participation games and more talk about bundling.

All the manufacturers had touch screen features that I thought were pretty cool.

What’s the difference between BYI’s iView DM and IGT’s Service Window?

  • To the player, these two “windows” look roughly the same and have the capability of providing the same services and applications.  The major difference is that BYI’s window has a bar across the bottom of the screen as well as a pop up on either the right or left side of the base game.  IGT allows each player to customize the look and feel of their service window and only comes across the left side of the monitor
  • To the operator there some major differences, IGT’s Service window is built into the game CPU so if it’s not a new AVP box or a new WMS box that comes with the built in feature you can’t add it.  BYI’s iVIEW DM is a standalone hard drive that sits on top of a game’s CPU.  This means that you can add the service window feature to any new or old video slot machine and while opening the box of an IGT or WMS game voids the warranty on the game we would wager that if operators really wanted to do this than IGT and WMS would probably need to work with them… we’ll wait and see what they do at Pechanga
  • IGT has developed a server window interface which will allow operators to get the service window on non-AVP IGT machines through the Next Gen hardware which will come to market in June 2010…. They are not currently developing a similar bridging solution for non-IGT games

New markets:

  • Illinois: shipping to this market should begin in Sept 2010.  IGT already has a distributor agreement signed as does WMS (Betson).  Aristocrat (ALL.AU) and BYI in negotiations with distributor
  • All the manufacturers are in talks with Italian concession holders.  We should see some shipments in FY 2010
  • Australia:  WMS is testing products that will address the ~ 130k club market, believe that IGT and WMS are addressing the smaller casino market (20k games)

Manufacturer highlights:

BYI:

For sale games:

  • BYI has a nice looking new Pro-series (alpha 2 cabinet) being launched this year
  • More than just one title for the V32 cabinet should translate into more traction in video sales
  • While the new reel product (replacing the aging S6000s) may have looked boring to the video player or investor, we heard some good feedback from the operators

Participation games:

  • The U-Spin game definitely stole the show for games that are going to be ready for commercialization within the next few quarters
  • Two-seater games “Meet in the Middle” and “Move around the Board
  • Digital Towers
  • Hot Shots Progressive with a wheel bonusing features

Future games (12 -18 months away):

  • The iVIEW Display manager was impressive.  Instead of a button panel, BYI has a touch screen panel that has the feel of an iPhone.  Players can customize the panel and have multiple options of how to initiate spins.  The new touch functionality will also allow them to introduce more “skilled based” games where players can “roll” balls etc.  Remember that BYI still has rights to the Atari library
  • Alpha 2 pro-series box – great graphics/sounds and touch functionality
  • BYI has a “MLD” like product – with LCD projection over curved glass behind an LCD screen.  This curved glass really creates a similar feel to traditional spinning reels - we expect that BYI will develop interesting transmissive overlays on the front screen in the coming months.  We believe that unlike IGT’s MLD, most operators who purchase this game will use it as a true substitute to reels

WMS:

WMS did a great job on content – big “wow” factor.  The company had obviously focused its R&D on growing the gaming market by appealing to that younger 30-50 yr old demographic.

WMS continued to rollout successful features like adaptive gaming, community gaming, and sensory emersion/“emotion” across more of their content and add more features to updated versions of successful franchises.

New franchises like “Lord of the Rings” and “Price is Right” were particularly impressive and had a number of “hooks” that provided the secret sauce to the success of “Wizard of Oz” and “Star Trek”.

Future games (12-18 months away)

  • WMS is still the only company that recognizes players no matter where they play, but now WMS is going to try to increase player/casino loyalty by allowing players to continue to learn about the game from home… basically tapping into that MMOE universe.  This should attract younger players, create enhanced player loyalty, venture into online “gaming”, without the wagering, by letting players to continue the game experience at home
  • WMS will be using the top LCS screen on top of base games to create new bonus game content (mega multipliers, community mega multipliers/Meta Screen, Winner’s Share) which they will sell on a fee per day per license basis in FY2011.  Should materially enhance the performance of base games…currently in trial at a few locations

IGT:

Consolidating platforms should boost cash flow generation as they refresh roughly 20k games every year.

The MLD/AVP platform is really letting IGT produce some great for sale product.

Introduced new participation product that uses some of WMS’s success of episodic gaming and player recognition.

New “Sex in the City” and “Cougar” titles were intriguing.

The 103/70 FT screens can be used to refresh participation content with minimal cost (“American Idol”, “Wheel of Fortune Spin”, “Wheel of Fortune Puzzle”).

“Skilled based” reel game with the joystick driven “star” bonus round that should appeal to the younger 30-50 crowd.

IGT is really utilizing and sharpening their MLD technology, we expect that they for an extra $3K many casinos will opt for the AVP MLD games vs the regular video product.  IGT is expecting that 25% of total game sales will be MLD in 2010; we wouldn’t be surprised if it’s even higher with the new bonus features and enhanced content/titles available on that platform.

IGT has something called “discovery gaming” which is similar to WMS’s adaptive gaming concept.  Discovery gaming isn’t truly server based – since the game will only recognize players at a particular facility.  IGT said it will take them roughly 24 months to become truly server based with this concept.  Discovery gaming will be featured on the “Quest for Lost City” game.

The multi-play (4 games occurring at the same time) and press and play features on many of IGT’s for sale titles were interesting.